DRB-Hicom posts RM4.74b revenue in 1H20, backed by strong car sales

By NG MIN SHEN / pic by MUHD AMIN NAHARUL

DRB-Hicom Bhd recorded revenue of RM4.74 billion in the first-half ended June 30, 2020 (1H20), led by its automotive sector as car sales were lifted by the tax holiday.

For the six months in focus, the group posted a net loss of RM479.36 million, it said in an exchange filing today.

In the second-quarter ended June 30, 2020 (2Q20), revenue amounted to RM2 billion while net loss stood at RM306.08 million.

“These numbers reflect the impact of the Covid-19 Movement Control Order (MCO) that is now in its fifth month,” DRB-Hicom said in a statement today.

Specific to 2Q20, full economic activities only started to resume in mid-May upon the gradual reopening of the economy as announced by the government.

“Apart from the impact of the lesser working days in the quarter, the group was also affected by the modification loss recorded by Bank Muamalat Malaysia Bhd arising from the financing moratorium that was introduced by the government to ease the burden of the rakyat, apart from impairment loss of certain fixed assets,” the group added.

No year-on-year quarterly comparisons were provided in the current financial year, due to the change of the firm’s financial year-end to Dec 31 from March 31 previously.

During the first-half this year, the group recorded automotive revenue of RM2.87 billion, boosted by the sales tax exemption. Its automotive brands represent some 33% of the total industry volume in Malaysia.

Revenue was mainly derived from sales of vehicles and components by Proton Holdings Bhd, automotive distribution companies, and also from manufacturing and engineering and aerospace companies.

However, automotive sales for 1H20 were also affected by the temporary closure of business operations from mid-March to early May amid the MCO.

Services revenue came in at RM1.7 billion in the first-half, with Pos Malaysia Bhd boosting their parcel delivery numbers in the period as Malaysians adjusted their shopping habits towards online channels.

“The national postal company’s revenue has also been positively impacted by the revised postal tariff that was implemented beginning February 2020,” DRB-Hicom added.

Meanwhile, the group’s properties revenue of RM172.24 million in 1H20 reflected the impact of lower activity in the construction sub-sector amid pandemic containment measures, as well as lower sales of properties.

Despite the effects of the pandemic and the MCO, the group said recovery efforts by its individual businesses are currently ongoing and should be reflected in its 2H20 performance.

“For DRB-Hicom’s automotive businesses, Proton’s sales have continued to rebound, underlined by the national carmaker’s July monthly sales of 13,216 units, which was the highest monthly sales since June 2012.

“With consumer confidence in the brand rising, PROTON will continue to excite the market with revised and new product offerings over the rest of the year,” it said.

Reaping the benefits from the sales tax exemption for passenger vehicles until December 2020, the firm’s other marques are also expected to boost their sales performance in 2H20, featuring new or revised models.

Pos Malaysia’s ongoing transformation efforts will also augment the improved tariff rates approved earlier this year, and the growing demand for e-commerce.

Other businesses of the group will continue to adapt to the “new normal” environment to ensure financial sustainability, against a backdrop of changes in customer and consumer behaviour.

“With fears of a resurgence of the Covid-19 pandemic and its expected subsequent waves, coupled with the potential of a further weakening economy globally, DRB-Hicom remains cautious on the challenging financial year ending December 31, 2020,” it said.

Nevertheless, it continues to proactively manage its businesses to ensure stable long-term prospects, through initiatives including ongoing cost management and efficiency improvement efforts across all of its operating companies.